We welcome the recognition of the work carried out by the Council and the higher education sector on delivering the strategic objectives in key policy areas. We look forward to making further progress in collaboration with our partners.

We also welcome the acknowledgement of the achievements in reducing bureaucracy and reinforcing local autonomy and accountability. We will do all we can to continue reducing bureaucracy in the future.

The letter confirms the additional funding and growth in student numbers announced in January 2003. Total institutional funding will increase from £6,406 million in the 2003-04 financial year to £6,928 million in the 2004-05 financial year (excluding Access and Hardship funding and the costs of capital and depreciation). This represents a cash increase of £522 million, or 8.1 per cent, although universities and colleges will be expected to deliver additional activity for these extra resources.

Student numbers for 2004-05 also take account of the additional foundation degree places that we expect to allocate in response to recent bids.

The HEFCE Board will consider the contents of this letter on 22 January and a further announcement will be made after that meeting.